42% discount on Hind Copper shares; NTPC sale cleared too

Tags: Plan
The government on Thur­s­day fixed the base price for the 4 per cent stake sale in Hindustan Copper at Rs 155 a share, offering investors 42 per cent discount to market price. The stock closed at Rs 266.30 on the Bombay Stock Exchange on Thursday.

The offer for sale of shares opens on Friday, kicking off the government’s disinvestment programme for the financial year. The cabinet committee on economic affairs that met on Thursday also decided to sell 9.5 per cent stake in power major NTPC, adding it to the list of nearly a dozen public enterprises that have been lined up for disinvestment during this financial year.

The government aims to mop up Rs 30,000 crore by diluting stakes in PSU firms to bridge the widening fiscal deficit.

On Thursday, the HCL scrip opened in the negative but soon gathered momentum amid high trading volume to touch an intra-day high of Rs 276.50. At one point, the stock was up 15.59 per cent over its previous close. Later, some profit booking led the stock to close the session at Rs 266.30, up 11.33 per cent.

Thursday’s gains added Rs 2,509 crore to the company’s market capitalisation, which stood at Rs 24,638 crore at close. The scrip had fallen 3.86 per cent and 1.76 per cent, respectively, in two preceding sessions.The government, which owns 99.6 per cent equity in Hindustan Copper, will divest an additional 5.6 per cent later this financial year, bringing down its equity to 90 per cent. The four per cent stake sale on Friday will be done through auction. The sale will start at 9.15 am and close at 3.30 pm. The 4 per cent stake sale is expected to fetch at least Rs 573.63 crore. The company said 25 per cent of the 3.7 crore shares would be reserved for mutual funds and insurance companies. “No single bidder other than mutual funds and insurance companies shall be allocated more than 25 per cent of the total size of the sale,” it said.On September 14, the government had given its nod for disinvestment of 9.59 per cent equity in the company through an offer for sale of shares through stock exchanges.

The stake sale in NTPC is expected to fetch around Rs 13,200 crore and the government stake will come down to 75 per cent from 84.5 per cent at present.“The cabinet committee on economic affairs has approved dilution of 9.5 per cent paid-up equity capital (about 78.33 crore shares) in NTPC out of the government’s shareholding of 84.50 per cent,” an official said on condition of anonymity.The government also decided to re-allocate three coal blocks that were taken away from NTPC for delay in the development of those mines. With the reallocation of the coal blocks, the overall valuation of NTPC is expected to go up. This, in turn, will help the government get higher proceeds from the share sale. During this financial year, the government aims to sell shares in Nalco, SAIL, MMTC, NMDC, NTPC and Oil India, among others. Disinvestment secretary Halim Khan on Wednesday said the next in the line could be NMDC or Oil India.To facilitate the disinvestment process, the government on Wednesday allowed Life Insurance Corporation to own up to 30 per cent stake in listed companies against the previous limit of 10 per cent. This will help LIC pick up more stake, particularly in those state-owned companies where it holds close to 10 per cent. Krsudhaman@mydigitalfc.com (With inputs from Amit Mudgill in New Delhi)

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